Q.On 1st January 2024, Krishna sold goods to Prasad for ₹20,000 on credit. On the same day, Krishna drew a bill on Prasad for the amount, payable 3 months after date, which Prasad duly accepted and returned. On the due date, Prasad honoured the bill in full. Journalise the above transactions in the books of Krishna (drawer) and Prasad (drawee/acceptor).

Noting charges are the small fee paid to a notary public for formally recording the dishonour of a bill of exchange. They are first paid by the holder but are finally recovered from the party who dishonoured the bill (the acceptor/drawee).

When a bill of exchange is dishonoured on its due date, the holder may get the fact of dishonour officially recorded by a notary public to obtain legal evidence. The notary notes particulars such as the date of dishonour, the reason, and the amount, and charges a fee for this service. This fee is called noting charges. Although the holder pays the noting charges in the first instance, they are an expense caused by the defaulting party, so they are ultimately borne by the acceptor (drawee) and added to the amount due from him.

Noting charges are the fee charged by a Notary Public for formally recording the dishonour of a bill of exchange. Though the holder pays the notary first, the charge is finally recovered from the party responsible for the dishonour (the acceptor/drawee).

This short-answer concept appears in the bills-of-exchange chapter of the AP Inter 2nd-year (Class 12) Accountancy syllabus, which aligns with the NCERT/CBSE commerce curriculum.

When a bill is dishonoured on the due date, the holder may want authentic proof of the dishonour for legal purposes. The bill is given to a Notary Public (an official authorised by the government), who presents it again for payment; if it is still not paid, the notary records (notes) the fact, date and reason of dishonour on the bill. The fee the notary charges for this service is called noting charges. These charges are first paid by the holder but are debited to the party responsible for the dishonour, so they ultimately form part of the amount recoverable from the acceptor.